Penny stocks that could be ‘buy’ candidates on Williams %R chart

The Indian stock market is consolidating after regaining some of the lost momentum after a sharp correction last month that took the indices around 15% below their peak.

Bulls have been able to push the indices back to near their all-time peaks, even though a sharp rise in oil prices due to the Russia-Ukraine war and its likely impact on the Indian economy continues to be a factor to watch out for.

Investors looking at charts and price and volume patterns have various parameters to decide whether a stock is ripe for the pick or is showing signals of past activity that is best left untouched.

We picked a metric called Williams %R, which is a momentum indicator that can signal bullish or bearish trends for a stock.

Developed by Larry Williams, Williams %R is the inverse of the Fast Stochastic Oscillator. Its reading varies between 0 and -100, with 0 to -20 indicating an overbought range and -80 to -100 being seen as an oversold zone.

Many traders play in the penny stocks arena where the volatility is high, liquidity low and are risky bets at large but also offer a ground for making money.

We ran an exercise to see which penny stocks are in the bullish zone as per Williams %R. In particular, we looked at stocks with market cap under Rs 50 crore, price in single or double digits at best with the William %R just crossing over -80 mark from the previous score at that level. We spotted around 41 such penny stocks which could be set for a trend reversal.

Filtering them from the top end of their market cap, we get names like Barak Valley Cements, Lehar Footwears, Aditya Consumer, Shradha Infraprojects, Nimbus Projects, Eighty Jewellers, Artefact Projects, B2B Software Tech, Surani Steel Tubes, Crown Lifters, Winsome Breweries, Fortune International, Supreme Infra, B N Rathi Securities and Ad-Manum Finance.

Lower down the order we have stocks such as Uniinfo Telecom, Gilada Finance, Madhuveer Com, Neeraj Paper, Link Pharma Chem, Silly Monks, Onelife Capital, Sampre Nutritions, Grovy India, Prima Agro, Octal Credit Capital, KJMC Corporate, Pan Electronics, Voltaire Leasing, Cospower Engineering, DMR Hydroengineering.